There’s a big difference between running a trucking business and running a profitable one. Make sure you know what that difference is with this helpful guide, walking you through the key components of a trucking business that turns a profit.
1 – Start off on the right foot
If you’re new to the trucking business, make smart start-up decisions:
- Trucking equipment – Should you buy used or new trucks, or should you lease? Buying new means maximum efficiency and the latest technology, but it also means a higher price tag. Buying used is cheaper, but you could be looking at expensive upgrades and repairs. Then there’s leasing, which comes with maintenance built into the leasing agreement, but also an obligation to fulfill the entire leasing period.
- Niche – What type of loads do you want to carry? While you might ultimately want to branch out to multiple types, starting out in just one niche allows you to minimize your equipment and training needs, and laser-focus your target marketing.
- Load boards – Are you considering your expenses when you make bids? Sure, you want to get the job, but be mindful of how much it’s cutting into profits.
- Website – Are you communicating who you are and what you do in a visitor-centric way? You don’t have to spend a ton of money on your website design and content, but you do need it to be easy to navigate, and you need it to look and sound professional.
2 – Build a quality workforce
You not only want to attract top talent for your trucking business; you want to keep them. That means being mindful of how you build, develop, and treat your workforce:
- Create an effective training program that helps ensure employee success
- Schedule regular evaluations that reward strengths and address weaknesses
- Set a climate that emphasizes the importance of work-life balance
3 – Build a quality customer base
One-off jobs may pay the bills, but you’re always left scrambling for new work. Long-term customers solve that problem but create another if they always pay late. Spend the time building a customer base you can count on and, equally important, one that can count on you:
- Make sales calls instead of relying solely on load boards which may not lead to long-term relationships
- Check credit to ensure potential customers have a history of paying bills on time
- Extend credit to those with good credit history
- Only agree to deadlines you know you can meet
- Build trust and rapport via your blog, newsletter, and social media platforms
4 – Manage your time wisely
Under the best of circumstances, there’s not enough time for you to do everything your trucking business requires. You need help, from people and technology:
- Delegate responsibilities
- Use time-saving mobile apps
- Update your software
- Outsource tasks (e.g., bookkeeping, collections)
5 – Use a cash flow budget
You don’t get paid until the goods are delivered. And even then, it will likely be weeks before you see any return. That means making sure you always have the cash on hand to cover the expenses necessary to get the job done. What you need is a cash flow budget:
- Use a template, Excel spreadsheet, or Quickbooks
- Set a minimum beginning balance
- Estimate your total available cash for the month
- Project your cash disbursements for the month
- Subtract total cash disbursements from total available cash
- Raise capital, need be
6 – Build good credit
Though you want to avoid debt as much as possible, there are times when your trucking business is probably going to need a loan. Build a solid credit history, not only to ensure that you qualify, but also to get the best interest rates on:
- Credit cards
- Bank or credit union loans
- Lines of credit
- Peer-to-peer loans
7 – Use invoice factoring for cash flow needs
Minimize debt by using invoice factoring when you can. Instead of borrowing money you need to pay back, invoice factoring simply pays you sooner on money that already belongs to you.
An invoice factoring company:
- Purchases your unpaid invoices
- Collects from customers on your behalf
- Advances you a lump-sum payment up to 90 percent
- Pays the rest of the invoice amount once it’s paid, minus a factoring fee
Set Yourself Up for Success
When it comes to business, there are no guarantees, but if you focus on these key components, there is some certainty – you dramatically increase the likelihood of not only making a profit but making it a healthy one.